Independent vs Restricted

NOTE: This post is more than 12 months old, and the information contained within may no longer be accurate.

The difference between restricted and independent advice is something I have dealt with regularly in my career. As a client, knowing which route is most suitable for you can be a hard decision as you want to ensure that you are getting the best advice for the money you are paying.

The FCA describes “restricted advice” as:

  1. a personal recommendation to a client which is not independent advice; or
  2. basic advice

There can be different versions of restricted advice and it is not always made clear exactly what your adviser is restricted to. They maybe restricted to only giving advice on their own companies products and investment funds, they may only provide advice on a limited range of products from a limited range of providers or in one area of need only.  

For me, independent vs restricted is a key consideration when assessing your existing position and receiving holistic financial advice.

I have recently provided advice to a client when planning for her retirement and assessing her protection needs. She held a current employer workplace group pension which was receiving ongoing employer/employee contributions, she also held a larger existing historic scheme and we also completed an assessment of the market. After assessing the client’s current circumstances, needs and objectives, we then looked at her current pensions for areas such as charges, penalties, flexibility at retirement and then compared these to what was available on the open market in order to provide her with a recommendation which met her objectives.  After considering all of these details it became clear that, due to the clients current benefits with her employer scheme, she would be better off consolidating her funds into her exiting workplace pension scheme.

I was able to build a suitable strategy from what the client already had available and consolidate the larger historic pension fund into the smaller workplace pension. This made a significant ongoing cost saving for the client and it also unlocked a range of other benefits within that scheme like to potential for entering into drawdown in the future.

Independent advice allows the adviser to consider the whole market and take into account all of the client’s potential outcomes, without being restricted to a single provider, area of advice or single area of need. 

Restricted advice has its place and fulfils a role in closing the ever widening “advice gap” that clearly exists and keeps people from seeking professional financial advice.  

As independent advisers we are able to assess the whole of the market including any valuable benefits you may already have and then base our recommendation on all of your available choices and not a restricted number of products from a limited range of providers.  

If you are considering taking financial advice and would like to know more about the independent services offered by Wingate Financial Planning, please do not hesitate to contact me directly. 

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26 Apr 2024

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